Outside Counsel Is Out, Legal Tech Is In, and Your Salary Is 'Meh'

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By Casey C. Sullivan, Esq. on December 06, 2016 3:02 PM

Corporate purse tightening continues to impact how in-house legal departments work, a new study shows. Companies increased their total legal spend by just a single percentage point, according HRB Consulting's 2016 Law Department Survey.

But how that cash is being spent is changing. Corporate legal departments are reducing their spending on outside counsel, the survey found, while upping their investments in legal technology. Meanwhile, in-house salaries have shown only the most modest gains.

Companies Are Spending Less on Outside Counsel, More on Legal Tech

"The survey confirms what we are seeing in our consulting engagements with law departments, where there is heightened attention on resource optimization -- the right resources, doing the right work, in the most cost effective and efficient manner," according to HBR managing director Lauren Chung.

The Law Department Survey drew on responses from more than 275 participants, representing legal departments, typically larger ones, in over 10 countries and across 22 industries.

While law department spend increased one percent, spending on outside counsel dropped by two. That's not a massive fall off, but it does indicate that law departments are keeping more matters in-house, according to the survey.

The drop in outside counsel spending is matched by an increased focus on legal technology. Thirty-nine percent of respondents said that they were increasing their use of technology, according to the survey, with a median tech spend of $153,171. That money wasn't going straight to robot lawyers or biometric monitoring, though.

Document management was the most common focus of technology spending, followed by legal spend analytics (robot belt tighteners, if you will), and contract management.

Where's Your Raise?

If there's less spending on outside counsel and more on technology, where does that leave you? Not too far off from where you were before, apparently.

Compensation increases for in-house lawyers has been modest, according to the report. Total compensation, covering base salary, cash bonuses, and long-term incentives, grew only 3.3 percent.

That, HBR Consulting notes, stands in contrast to recent raises in many BigLaw firms. New associates at Cravath recently got bumped to $180,000 a year. That's a raise of 12.5 percent and more than some veteran in-house attorneys make. Even first year associates at midsized firms were expected to see a larger (3.5 percent) increase in their salaries in 2017, according to Robert Half Legal's 2017 Salary Guide.

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